Women, girls find clothes prices down 6.4% drop comes at a time when increases are normal

A Baltimore phenomenon

Market share sought amid sluggish sales

November 03, 1997|By Liz Bowie | Liz Bowie,SUN STAFF

Buried in the fine print of the Bureau of Labor Statistics' consumer price index is this message for women: It's time to shop for clothes.

The price of clothes for girls and women in Baltimore has dropped 6.4 percent since July, the Consumer Price Index said. That's a big drop, according to Maureen Greene, an economist with the Bureau of Labor Statistics, who has followed the price index for years.

Normally, retailers raise prices 7 percent to 14 percent during August and September as they bring in new fall merchandise at full prices, Greene said. Some years, the increase in prices is even more dramatic. In 1990, for instance, prices rose 31.7 percent during August and September.

Greene isn't sure why there was such a sudden decrease in price, but she said it followed a small, but unusual price increase in July. Greene speculated that retailers may have had difficulty getting rid of summer inventories, then brought in fall merchandise in July with a slight rise in price.

"They may have gotten fall merchandise in early -- brought it in, in July, and then marked it down in pre-season sales," Greene said.

Economists and analysts had a hard time explaining the decline, which was unique to Baltimore in the mid-Atlantic region. Philadelphia saw a 31.8 percent increase from August to September after five months of price declines. Washington has seen a 9.5 percent increase since July.

Two department store chains, Target and Nordstrom, declined to say whether prices had dropped in their Baltimore-area stores. Both said they respond to their competition, however. "We shop our competitors, and we won't be undersold," said Joan Smith, a spokeswoman for Nordstrom Inc.

While analysts were reluctant to assign a particular reason for the decline, they said it is likely a variety of factors, including the intense competition between retailers in the region.

In the past couple of years, several chains, including Annie Sez, TJ Maxx, Target, Talbot's and Anne Taylor, have come into the region or opened stores. In addition, department stores, which had carried merchandise at higher prices than some other retailers, have begun to drop prices to compete with discount retailers, said Mark Millman, president of Millman Search Group Inc., a Lutherville-based retail consulting firm.

"They have gotten more price-conscious and competitive," Millman said. "They are value-oriented. Everyone is dropping prices."

Because retailers have offered so many sales in the past, women are increasingly unwilling to pay full price for clothing. They also feel they are likely to be able to go down the street and find it on sale somewhere else, analysts said.

"Generally, the women's apparel business is very tough," said Maria O'Shea, an analyst with BT Alex. Brown. "Women have full closets and they are enticed to buy on price."

O'Shea believes the competition forces some retailers out of business. "I think there is likely to be a general shakeout in women's apparel."

Baltimore shoppers may be more inclined to buy discount clothing than are shoppers in the Philadelphia and Washington markets. The price decline reflects what is going on in the Baltimore market in general, said Charles McMillion, chief economist at MBG Information Services, a Washington-based forecasting and economic consulting firm. "Consumption is not growing the way folks thought it would," he said.

McMillion said wages have not increased in the 1990s at the pace that they did in the 1980s. Personal bankruptcies are at high levels. Consumer debt is rising and savings are falling, he said.

The result? Women are not likely to go out and buy new clothes unless they need to.

"Sales have been very sluggish, so the big battle has been over market share," he said. "It has been brutal for main street merchants."

Pub Date: 11/03/97

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